Uncover the value in your advice. Value proposition resource

Transcription

1 Uncover the value in your advice Value proposition resource

2 Knowing what s valuable about your advice has never been more important Financial advisers who can demonstrate value to clients will fare much better under a fee-for-service remuneration model. They will also find it easier to separate their advice from product recommendations, attract new clients and, ultimately, become more successful and profitable. Many advisers are comfortable explaining the value a client receives from an initial meeting but find it challenging to articulate the value a client will receive from an ongoing relationship. If this sounds like you, it would be worthwhile taking the time to revisit your value proposition. This guide has been designed to help uncover the value in your complete advice offering and develop a compelling value proposition that s relevant for your clients and today s market. Common problems with value propositions The value of financial advice is often overlooked because many people underestimate the complexity involved in financial planning. For this reason, it s important to be able to clearly explain the value a client will receive from your advice. All too often, value propositions simply explain service deliverables rather than what s in it for the client. For example, the value propositions of many financial planners sound something like this; to provide a comprehensive and tailored financial plan that helps clients achieve long-term wealth. But this describes what financial planners do, not the value a client receives. A more compelling value proposition relates the benefits of advice to the particular needs of clients, and may read something like this; to set clear financial goals and then guide clients through the ups and downs of markets so that their wealth grows to a level that allows them to afford their desired lifestyle. As a general rule, your value proposition should focus on the benefits that matter most to your clients and explain in simple terms what they can expect to receive. Assessing your value proposition Here s a quick list of questions you can ask yourself to determine how effective your current value proposition is. 1 Do you find it easy to provide ongoing services considered valuable and/or justify ongoing fees? 2 Are you aware of what your clients value most about your advice? 3 Do you think clients understand the value that you can provide beyond product recommendations and the initial financial plan? 4 Does your value proposition relate directly to the needs of your target clients and use specific, clear language? YES NO If you answered no to any of these questions, you would benefit from taking the time to develop a new value proposition or revisit your existing one.

3 What do your clients value? Understanding what your clients are looking for from a financial adviser, and from their investment portfolio, is essential in order to create a strong value proposition. The best way to validate this is to carry out some research. The research doesn t have to be extensive. You can get a good idea about what drives your clients and what s most important to them, and therefore to new clients also, by asking them the following questions: How would you describe your long-term financial goals? Why ultimately did you engage a financial planner? When you first started your search for a financial planner, what criteria did you use? Why did you choose me as your financial planner? Would you recommend me to another person? Why? Why not? If you were going to recommend me to another person, what would your reasons be? Have I met your expectations? Why? Why not? It s also not necessary to spend a lot of money on research or engage an external research company. You could consider conducting your own research in the following ways: or post a client satisfaction questionnaire to all your existing clients. Arrange a focus group by inviting small groups of clients into a meeting to discuss what they value most about advice. Ask a question about what a client finds valuable in each client meeting. People are often quite happy to participate in research, but offering a small incentive (such as movie tickets) can increase the number of responses you get. Developing your value proposition To create a truly effective value proposition you need to have a clear understanding of what matters most to your clients and how the benefits of your service offering create value. Once you re ready to begin, the process of creating a value proposition involves three main steps: Step 1 Step 2 Step 3 Knowing your clients and what matters most to them Knowing how your service offering relates to the needs of your clients Writing a short statement that explains what value your clients can expect to receive Note: keep in mind that you may need more than one value proposition, depending on how diverse your client base is.

4 Value proposition template It s time to put pen to paper and create your value proposition. Use our question prompts to guide you through the process, and make sure you take the simple test to check the strength of the proposition. What is most important to your clients when seeking advice? Explain how each aspect of your service offering relates to the needs of your clients? Combine the responses to the above two questions into a statement about the value you can provide Testing your value proposition Once you have created a value proposition you should test it against the following criteria: Can this be supported with proof? Test your value proposition out on your colleagues, referral partners and most importantly, existing and potential customers. If the response to your value proposition is so what? you know that it s not strong enough. It is a point of difference?

5 What s valuable about your advice? Clients will value your advice if it satisfies a particular need they have. For this reason, it s important to think of your service offering from a client s perspective and relate the benefits of your advice to the particular needs of your clients. The sophistication behind a financial plan is often underestimated. Advisers have the skill, knowledge and experience required to help clients reach their financial goals. To help you start thinking about what s valuable about your advice, we ve listed some of the intangible key benefits of financial advice that came out of forums Zurich Investments has held with financial advisers and practice development managers. Benefits of financial advice Leadership, strategic direction and goal clarification Behaviour management and support Expertise Time saving Focus Score keeping Ongoing discovery, identification of problems or opportunities and course correcting Why it s valuable Advisers make every effort to understand (and in many cases help a client to understand) what a client wants and then set a strategy to reach it. Clients get a leader to guide them through the complexities of financial planning. Few of life s journeys are smooth rides and often hit a bumpy road. Advisers provide empathy, emotional support, perspective and confidence in order to help clients stay on course and avoid making inappropriate decisions when they re under pressure. The sophistication behind a financial plan is often underestimated. This is because many of the benefits of financial advice are intangible and only apparent after the passing of many years. Advisers have the skill, knowledge and experience required to help clients reach their financial goals. Advisers save clients time. Advisers take care of monitoring investments, lodging applications, undertaking research, compliance and handling all administration tasks. Particularly in times of uncertainty, it s easy for people to lose sight of their long-term plan. Advisers constantly monitor clients investments to ensure clients remain on track. Clients tend to believe that the chances of a successful outcome are much higher than they actually are. This is a common bias found in behavioural psychology called optimism bias. Advisers provide a rational and unbiased perspective, which allows clients to formulate realistic goals. Goals change, attitudes change, relationships change. Not only must a plan be monitored, but the goals and relevancy must be tested. Advisers use sophisticated questioning to ensure that the plan is still relevant for the client s circumstances.

6 Zurich Investments appreciates the importance of navigating the changing landscape of financial advice. We're here to help your world. For more information contact or visit SWAD ZU11482 V2 05/11 This publication, dated May 2011, is for your general information only, and is given in good faith and does not contain legal advice. The content is derived from sources believed to be accurate as at this date, which may be subject to change. It should not be considered to be a comprehensive statement on any matter and should not be relied on as such. This publication should be taken as a replacement for disclosure obligations, which apply in providing retail financial advice. Nether Zurich Investment Management Limited ABN AFSL nor any of its related entities, employees or directors (Zurich Investments) give any warranty of reliability or accuracy nor accept any responsibility arising in any way including by reason of negligence for errors and omissions. Zurich Investment Management Limited ABN AFSL Blue Street North Sydney NSW 2060 Zurich Service Centre Telephone: